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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Models where firms agree to mutually improve their situation






2. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






3. The ability to set the price above the perfectly competitive level






4. The additional cost incurred from the consumption of the next unit of a good or a service






5. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






6. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






7. Exists if a producer can produce a good at lower opportunity cost than all other producers






8. The sum of consumer surplus and producer surplus






9. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






10. The total quantity - or total output of a good produced at each quantity of labor employed






11. Exists if a producer can produce more of a good than all other producers






12. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






13. Two goods are consumer substitutes if they provide essentially the same utility to consumers






14. When firms focus their resources on production of goods for which they have comparative advantage






15. A good for which higher income decreases demand






16. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






17. Ed = (%dQd)/(%dP). Ignore negative sign






18. TR = P * Qd






19. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






20. Ed > 1 - meaning consumers are price sensitive






21. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






22. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






23. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






24. Ei > 1






25. The change in quantity demanded resulting from a change in the price of one good relative to other goods






26. The mechanism for combining production resources - with existing technology - into finished goods and services






27. The difference between total revenue and total explicit and implicit costs






28. Models where firms are competitive rivals seeking to gain at the expense of their rivals






29. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






30. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






31. Total product divided by labor employed. APL = TPL/L






32. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






33. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






34. The output where ATC is minimized and economic profit is zero






35. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






36. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






37. The price of a good measured in units of currency






38. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






39. The most desirable alternative given up as the result of a decision






40. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






41. The practice of selling essentially the same good to different groups of consumers at different prices






42. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






43. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






44. Entry (or exit) of firms does not shift the cost curves of firms in the industry






45. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






46. Product demand - productivity - prices of other resources - and complementary resources






47. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






48. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






49. Exists at the point where the quantity supplied equals the quantity demanded






50. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC







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